Outsourcing and offshoring are effective business practices that have gained immense popularity among big companies globally. Outsourcing occurs when a company agrees to sign a business agreement with another company and delegates some of its tasks to the new company. In outsourcing, a company decides to have some of its functions being accomplished by another company to cut production costs (Pisani & Ricart, 2016). On the other hand, offshoring refers to sending specific in-house tasks to another company in a different company. Mitsubishi Auto, being a major automobile company in Japan, has been involved in several outsourcing and offshoring instances as outlined below;
Mitsubishi Auto formed a business alliance with JATCO TransTechnology (JTT) and Nissan Motor Co. in 2001. The alliance authorized both JTT and Nissan Motor Co. to manufacture automatic transmissions and continuously variable transmissions for Mitsubishi Auto (Mitsubishi Motors, 2021).
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In 2001, Mitsubishi Motors Corp. signed an agreement with IBM Japan. The agreement led to Mitsubishi outsourcing its information technology systems involving applications maintenance to IBM Japan (Mitsubishi Motors, 2021).
Mitsubishi Corporation outsourced propeller shaft and front axle production to Advics Co., Ltd in 2002 (Mitsubishi Motors, 2021).
Mitsubishi Corporation opened Mitsubishi Electric Automotive de Mexico company in Mexico in 2013. The new company in Mexico would specialize in the production of alternators, starter motors and multimedia products (Mitsubishi Motors, 2021).
Major Problem
Mitsubishi Auto does not prioritize implementing next-generation car models.
Possible Solutions
Mitsubishi Auto faces several problems that threaten its market dominance in the automobile industry. For a company to withstand competition and overcome challenges in the industry, it should familiarize itself with new market trends, and customer needs to improve on its production (Badi, 2018). Mitsubishi Auto is facing the problem of over-reliance on old models of cars to meet the needs of new generations. Several possible solutions to the problem of relying on old-fashioned car models have been identified.
Forming Alliances with Other Automobile Companies
The automobile industry comprises companies that have prioritized inventing new car models appealing to the new generations globally. For instance, the 2022 Toyota Fortuner by Toyota company and the 2022 Ford Endeavour by Ford Endeavour company have prioritized the manufacturing of modern-day cars (Kaushik, 2021). As such, Mitsubishi Auto should form alliances with some of these companies to outsource and offshore its modelling activities. As a result, the company will introduce new models that would fetch a high market in the new generation of people. The formation of alliances with other automobile companies would enable Mitsubishi Auto to incur low costs while inventing and implementing new car models. However, forming an alliance between Mitsubishi Auto and other companies might have disadvantages. The major drawback would be the leakage of trade secrets, which would affect the company's operations negatively.
Instituting Extensive Research to Identify Its Customer Expectations and Needs
Customers' expectations and needs are identified through research works that should be done by the company affected. Therefore, Mitsubishi Auto should maximize research globally and fact-finding to identify the expectations and needs of its customers. Through research and fact-finding, the company will determine the gaps in its products; thus, implementing necessary measures to counter the gaps. The main advantage of conducting market research by Mitsubishi Auto is identifying production and marketing gaps among its customers. After identifying any production and marketing gaps, the company would be able to re-strategize its operations. On the other hand, the main disadvantages of conducting production and marketing research are the cost incurred and the time spent. The company would be forced to allocate funds for the study and assign part of its workforce the task of conducting the research, which would have adverse effects on the profitability of the company.
Choice and Rationale
The first choice of forming alliances with other automobile companies would be the best option for Mitsubishi Auto to deal with over-relying on old car models. First, when Mitsubishi Auto forms an alliance with other well-established companies, the chances of solving its problems will be high. Toyota company and Ford Endeavour company of India have conclusive research on the markets they operate in globally (Kaushik, 2021). Therefore, the problem of car modelling that is affecting Mitsubishi Auto will easily be resolved. Secondly, outsourcing and offshoring increase global competitiveness. (Ishizaka et al., 2019). Forming alliances with other companies will lead to outsourcing and offshoring of some tasks performed by Mitsubishi Auto. As a result, the quality of products will improve and be more appealing to customers, increasing global competitiveness and profit maximization. Conducting the research might not solve Mitsubishi Auto's problem effectively because of the rapid changes occurring in the different markets. The market needs are changing rapidly, and an issue identified in the year 2020 might be irrelevant in the year 2021.
Implementation
The first step towards implementing the plan of forming alliances with other automobile companies is to draft the alliance details. All the formalities, guidelines, and requirements of the alliance should be made clear to the companies planning to form an alliance. Secondly, clear communication of all the alliance details should be made known to the employees from the two companies to ease its absorption and implementation. Thirdly, the drafted and fully signed alliance should be implemented and all formalities adhered to by the companies involved. Lastly, frequent evaluations to assess the efficacy of the alliance and activities involved should be conducted. Any necessary changes should be made immediately after they are identified during the evaluation processes.
References
Badi, K. (2018). The Impact of Marketing Mix on the Competitive Advantage of the SME Sector in the Al Buraimi Governorate in Oman. pp. 1-10. https://doi.org/10.1177/2158244018800838
Ishizaka et al., (2019). Outsourcing and Offshoring Decision Making. 57(13): 4187-4193. https://doi.org/10.1080/00207543.2019.1603698
Kaushik, C. (2021). Top 10 SUVs New-Generation Models Planned – Brezza to Fortuner. indiacarnews.com/news/top-10-suvs-new-generation-models-planned-brezza-to-fortuner-46675/
Mitsubishi Motors. (2021). Mitsubishi Company History. mitsubishicars.com/what-drives-us/history
Pisani, N., & Ricart, J. (2016). Offshoring of Services: A Review of the Literature and Organizing Framework. 56: 385-424. https://link.springer.com/article/10.1007/s11575-015-0270-7
